Was it a security breach, a technical snag or just a logistical issue for delay in releasing the new Rs 500 note?
A day after the Prime Minister Narendra Modi made a surprise announcement of demonetisation of Rs 500 and Rs 1,000 note to break the back of black money hoarders and counterfeiters, the Rs 2,000 note reached the banks' branches instantly, but the new Rs 500 note was conspicuous by its absence.
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That has created a new problem as it is difficult to get change for a Rs 2,000 note. The new Rs 500 note has now landed at the banks after five days of the demonetisation announcement.
What created the delay when such a big decision was taken to withdraw the high value notes from the market?
RBI insiders dismiss the security breach or a technical snag theory and instead reason that the issuance of new notes is part of the overall 'roll out plan of currency'. "It is a step by step roll out. The delay was purely because of logistical issues," says an RBI official.
There is, however, no denying the fact that the Rs 500 note has been under the attack of counterfeiters from across the border, especially Pakistan.
In December last year, the Minister of State for home Haribhai Chaudhary blamed Pakistan in the Parliament. The minister said as per the inputs available, that high quality fake currency notes are printed in sophisticated presses located in Pakistan. "High quality fake currency notes seized in India and abroad, originate only from Pakistan, which has created a self sustaining criminal network in South and South-East Asian region for infusing fake currency into India via Nepal, Bangladesh, Thailand, Malaysia, Sri Lanka and UAE."
Similarly, RBI data also clearly indicates that the Rs 500 note has seen the highest instances of counterfeiting followed by Rs 1,000. In 2015/16, RBI came across 2.61 lakh cases of fake Rs 500 notes as compared to 1.43 lakh cases of fake Rs 1,000 notes.
While these fake currency numbers as a percentage of total currency in circulation ( like 1,670 crore pieces of Rs 500 note and 632 crore pieces of Rs 1,000 note ) are too low and not even 1 per cent, but these fake currency numbers are the ones detected by the banks and the RBI. The actual fake currency in circulation could be much higher.
Globally, central banks keep on adding new security features in their currency to thwart the attempts of counterfeiters. The RBI had made the last big change in security feature in 2005 with a new series of bank notes.